Potential flashpoints at six FTSE 100 companies

An AGM revolt is brewing at Ocado Group (LSE:OCDO) after it unveiled an incentive plan that will see chief executive Tim Steiner get £14.8 million if he oversees a six-fold rise in share price.

Voting agency Glass Lewis has recommended shareholders oppose Ocado’s new remuneration policy, having voiced its concern about the potential for excessive rewards.

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It is more comfortable with the remuneration report at Unilever (LSE:ULVR), a year after the consumer goods giant lost the AGM vote in a protest at the pay of new boss Hein Schumacher.

The leaving arrangements of ousted BP (LSE:BP.) boss Bernard Looney and former Entain (LSE:ENT) chief executive Jette Nygaard-Andersen are also in the AGM spotlight, along with the pay deals of the current bosses of housebuilders Taylor Wimpey (LSE:TW.) and Persimmon (LSE:PSN).

BP

When: 11am, Thursday 25 April.

Where: BP International Centre for Business and Technology, Chertsey Road, Sunbury-on-Thames TW16 7LN.

How to participate: Proxy voting instructions should be returned no later than 11am, Tuesday 23 April. More AGM details can be found here.

Who’s in the chair? Helge Lund was appointed in January 2019, having served as chief executive of BG Group from 2015 until its merger with Shell in 2016.

How did the company do in 2023? Underlying replacement cost profit for the year was $13.8 billion (£10.8 billion), down from $27.6 billion due to portfolio changes, weaker refining margins and a lower oil trading performance. Operating cash flow of $32 billion (£25.1 billion) compared with $40.9 billion in 2022, while net debt reduced to the lowest level in a decade at $20.9 billion (£16.4 billion). A fourth quarter dividend of 7.27 US cents (5.69p) was paid on 28 March, representing a 10% increase over a year ago.

How have shares performed? Down 3% in 2023 to 466.15p (508.5p on Thursday).

How much is the boss paid? Murray Auchincloss was appointed interim chief executive in September on a base salary of £1.45 million, a figure unchanged for 2024 after his position was confirmed in January. His maximum bonus opportunity is 225% of salary, while incentive shares worth 500% of salary are subject to performance over three years and a further three-year holding period. Auchincloss’s total remuneration for 2023 amounted to £8 million, which compared with the £10.3 million received by Bernard Looney the previous year and the decade high of £12.7 million for Bob Dudley in 2015. The 2023 figure received by Auchincloss included an annual bonus of £1.8 million based on 79.5% of the maximum opportunity while the 75% vesting of long-term incentive shares contributed £4.6 million.

What are the departure arrangements for Bernard Looney? He resigned with immediate effect in September following his failure to fully inform the board of personal relationships he had with colleagues. The board concluded that his actions amounted to serious misconduct, and he was dismissed without notice, effective from December. The maximum value of forfeited or clawed back awards amounts to around £28 million. He will not receive 2023’s annual bonus of £2.59 million, nor the £7.67 million of performance shares due under the 2021-23 long-term incentive scheme. Deferred shares from the annual bonus schemes of 2021 and 2022 have lapsed, amounting to £2 million. The decision that Looney should not retain any variable pay relating to the period after he gave misleading assurances to the board in July 2022 means he has repaid £420,000 of that year’s annual bonus and forfeited £529,000 from shares that had vested under the 2020-22 long-term incentive plan. His departure also meant he missed out on a potential £14.7 million of unvested performance share awards under the 2022-24 and 2023-25 plans.

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How did last year’s AGM go? The annual remuneration report received 81.95% support, while the binding vote on the three-year remuneration policy got 94.23%.  

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

How’s the company doing on diversity? Following Kate Thomson’s appointment as chief financial officer earlier in the year. 54% of the board comprises women with two in senior positions. Three directors identify as being from an ethnic minority background.

Unilever

When: 11.30am, Wednesday 1 May.

Where: Hilton London Bankside, 2-8 Great Suffolk Street, London SE1 0UG.

How to participate: Proxy voting instructions should be returned no later than 11.30am, Monday 29 April. A live webcast of the meeting will be available but shareholders will not be able to ask questions via this facility. More AGM details can be found here.

Who’s in the chair? Ian Meakins, the former Wolseley and Travelex chief executive, succeeded Nils Andersen on 1 December. He is also chair of Compass.

How did the company do in 2023? Underlying sales growth of 7% was driven by inflation-led higher prices but turnover fell 0.8% to €59.6 billion euros (£50.9 billion) as a result of foreign exchange and disposals. Earnings per share rose 1.4% to 2.60 euros, held back by Unilever’s exposure to emerging market currencies. A strong cash flow performance led to the return of €5.9 billion to shareholders in 2023, including an unchanged fourth quarter dividend of 42.48 euro cents (36.47p) a share that was paid on 22 March.

How have shares performed? Down 9% to 3,800p (3,872p on Thursday).

How much is the boss paid? Hein Schumacher was appointed last summer on a salary of €1.85 million, which compared with predecessor Alan Jope’s €1.56 million. His total remuneration for 2023 amounted to €3.9 million euros, including cash and deferred shares worth €1.86 million after the annual bonus scheme paid 77% of the maximum opportunity. Downward discretion was applied to the outcome. Buy-out awards to replace those at previous employer Royal FrieslandCampina, the global dairy and nutrition business, contributed €648,000 to the overall figure.

Why was downward discretion used? Whilst the remuneration committee said performance in the year was strong, it said there was scope to improve competitiveness following a failure to win sufficient market share in a number of key markets. The committee also said that Unilever’s share price performance was below expectations. Taking both factors into account this led to the reduction of the bonus scheme’s maximum formulaic outcome of 150% down to 115% for all eligible management employees including the executive directors.

How did last year’s AGM go? The remuneration report was not passed after 58% of votes were cast against, reflecting discontent over Unilever’s approach to setting the level of the incoming CEO's remuneration. The company said feedback from shareholders showed a preference for his pay package to align with the market in stages, rather than in one step on appointment.

How has the company responded to the vote? Schumacher will not be eligible for a fixed pay increase this year or next, ensuring market alignment on pay is achieved within two to three years following appointment. It points out that the remuneration of recently-hired chief financial officer Fernando Fernandez is at the median level of the peer pay benchmarking group.

What’s in the new remuneration policy? The company does not propose any changes to the overall structure or the incentive quantum of the policy, which was last approved in 2021 with 93.51% of shareholder votes in favour. It plans to amend the remuneration benchmarking peer group to include US as well as European consumer companies and to adjust the performance targets and weightings used in the annual bonus and performance share plan.

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What’s in the climate vote? At 2021’s AGM, shareholders voted in favour of Unilever’s first ever Climate Transition Action Plan (CTAP) report. This set out the actions that the company is taking to reduce greenhouse gas emissions in its business and across its value chain as part of an ambition to reach net zero by 2039. While Unilever has reduced emissions in its operations by 74% versus 2015 and cut the emissions intensity of its products across the value chain by 21% versus 2010, it said achieving significant absolute reductions in the Scope 3 emissions generated indirectly by suppliers and customers in the use of its products has been more challenging. The updated CTAP, which is subject to an advisory vote, includes new, near-term Scope 3 reduction targets developed with reference to the Science Based Targets Initiative 1.5C criteria. They will exclude indirect consumer use emissions such as from hot water in showers when Unilever products are used and over which the company has little direct influence. New near-term targets include to reduce value chain (Scope 3) emissions from energy and industrial sources by 42% by 2030 against a 2021 baseline and value chain (Scope 3) emissions from forest, land and agriculture by 30.3% by 2030 against 2021’s level.

What’s the view of voting agencies? Glass Lewis believes Unilever has provided an adequate response to last year’s dissent and that the implementation of the remuneration policy has been reasonable in the past year. It recommends shareholders vote in favour of the annual remuneration report, as well as the climate action plan report.

How’s the company doing on diversity? At the end of 2023, the board was 42% female with one third ethnic minority representation.

Ocado

When: 1.30pm, Monday 29 April.

Where: Deutsche Numis, 45 Gresham Street, London, EC2V 7BF.

How to participate: Proxy voting instructions should be returned no later than 1.30pm, Thursday 25 April. More AGM details can be found here.

Who’s in the chair? Rick Haythornthwaite, the former Invensys chief executive and recently-appointed chair of NatWest, joined the Ocado board in 2021 and announced this week that he would not seek re-election at the 2025 AGM. Since being appointed to the NatWest role, he said it was evident that “pressure on my time is likely to increase over the medium term”. Haythornthwaite added: “Given that Ocado has a strong and stable board, a high-quality management team as well as good momentum in business performance, I have made public my intention to step down a year from now to ensure that the company has sufficient time for a measured chair succession."

How did the company do in the 52 weeks to 3 December? Revenues of £2.7 billion were 9.9% higher, with the software and robotics platform division 44% higher at £420.5 million for earnings of £15.4 million compared with a loss of £102 million in 2022. Ocado Retail, the joint venture with Marks & Spencer, improved sales by 7% to £2.4 billion for earnings of £10.4 million. The overall loss narrowed to £393.6 million from £500.8 million the year before.

How have shares performed? Down 11% to 594.2p (417.2p on Thursday). 

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How much is the boss paid? Co-founder and chief executive Tim Steiner’s base salary increased on 1 April by 3.8% to £824,570. His total remuneration for 2023 amounted to £1.96 million, which included £1.1 million of cash and deferred shares based on 50.6% of the maximum bonus opportunity. No awards vested under the Value Creation Plan due to the minimum total shareholder return underpin not being met.

What’s in the new remuneration policy? A new long-term incentive plan has been proposed for executives that includes the potential for Steiner to get a one-off 1,800% of his base salary should shares hit 2,969p three years after the 2024 grant of shares. This is worth the equivalent of £14.8 million. Even if the price is not met, a strong total shareholder return performance versus peers has the potential to generate 600% of base salary. The base award under the scheme is 400% of salary, which will be measured against an improvement in 2026’s earnings per share versus 2023’s performance and on underlying cash flow in 2026.

Why is the company making this change? The 2022 AGM approved the Value Creation Plan for an additional three years, with 70.73% of shareholder votes in favour of the annual remuneration policy. However, the company says “unprecedented volatility” in Ocado’s share price has served to undermine the impact of the scheme to the extent that it is no longer motivating or retentive to many of its participants. It is rebalancing the remuneration structure so that fixed and short-term elements are reduced, but with a new performance-based long-term incentive plan offering “upper decile payout only for upper decile performance”. As part of the changes, the annual bonus opportunity for the chief executive is to be reduced from 275% of salary to 200% by the 2026 financial year.

What’s the view of voting agencies? Glass Lewis has concerns over the potential for excessive remuneration, particularly as a result of the 'enhanced multiplier' on Steiner’s performance shares award for 2024. This is despite acknowledging certain mitigating factors, such as the one-off nature of the award, the stretching targets required for maximum payouts and the greater weighting towards long-term performance following the reduction in annual bonus from 2026. It recommends shareholders vote against the remuneration policy and the performance share plan resolution, but in favour of the annual remuneration report.

How did last year’s AGM go? The annual remuneration report was approved with 69.86% of votes in favour.

How’s the company doing on diversity? The representation of women on the board increased to 50% in February, although with none in senior positions. At least one director is from an ethnic minority background.

Taylor Wimpey

When: 10.30am, Tuesday 23 April.

Where: Crowne Plaza Gerrards Cross, Oxford Road, Beaconsfield, HP9 2XE.

How to participate: Voting instructions should be returned no later than 10.30am, Friday 19 April, with the same deadline for the submission of questions in advance of the meeting. An audiocast facility will be available. More AGM details can be found here.

Who’s in the chair? Robert Noel, the former chief executive of Land Securities, joined the board in 2019 and is hosting the AGM for the first time.

How did the company do in 2023? Revenues in a year impacted by increased mortgage rates fell by 20.5% to £3.5 billion. Pre-tax profits declined by 42.8% to £473.8 million and earnings per share by 45.3% to 9.9p. In line with the company’s policy to return 7.5% of net assets or at least £250 million annually, the company intends to pay a final dividend of 4.79p a share on 10 May. The total of 9.58p is 1.9% higher than the year before.

How have shares performed? Up 43% to 147.05p (134.1p on Thursday).

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How much is the boss paid? The salary of Jennie Daly increased on 1 April by 3% to £795,675.

Her total remuneration for 2023 was £2.2 million, including cash and deferred shares worth £1.1 million after the annual bonus scheme paid 91% of the maximum opportunity. The company said this followed a “good financial performance” with profit at the top end of guidance and completions in line. The 40% vesting of long-term incentives granted in 2021 contributed £274,000 to the final figure. This was after the threshold performance for the return on net operating assets, operating profit margin and customer service were not met but a total shareholder return of 7.7% placed Taylor Wimpey in the top quartile of the housebuilding peer group over the three-year period. 

How did last year’s AGM go? The new three-year remuneration policy was approved with 91.69% of shareholder votes in favour. The annual remuneration report got 93.70%.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

How’s the company doing on diversity? The gender split of the board is 44% female, including one director in a senior role. Board ethnic diversity stands at 11%.

Persimmon

When: 11am, Thursday 25 April.

Where: York Racecourse, Knavesmire Road, York, YO23 1EX.

How to participate: The AGM will be an in-person meeting only. Proxy voting instructions should be returned no later than 11am, Tuesday 23 April. More AGM details can be found here.

Who’s in the chair? Former William Hill and Marston’s chairman Roger Devlin was appointed in June 2018.

How did the company do in 2023? Completions fell to 9,922 from 2022’s 14,868, with the new housing gross margin down in line with guidance to 20.5% from 30.9%. Average selling prices increased 3% to £255,752 as revenues fell 27% to £2.77 billion and pre-tax profits more than halved to £351.8 million. Underlying earnings per share of 82.4p were 67% lower. A final dividend of 40p a share is due on 12 July, giving an unchanged total for the year of 60p.

How have shares performed? Up 13% to 1,389p (1,293.5p on Thursday).

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How much is the boss paid? After 2023’s planned 3% rise was deferred due to the trading conditions, the salary of Dean Finch increased by 5% in January to £784,088. His total remuneration for 2023 amounted to £2.25 million, representing a slight rise on a year ago. He got cash and deferred shares worth £1.3 million after the annual bonus scheme paid 85.16% of the maximum opportunity. Financial metrics account for 60% of the bonus award, with the rest based on build quality and customer care standards. The 14.3% vesting of long-term incentives granted in 2021 contributed £121,016 to the final figure. Finch has committed to acquire £100,000 Persimmon shares following the 2023 annual results, having built a shareholding equivalent to about 175% of his salary.

How did last year’s AGM go? The new three-year remuneration policy got 98.7% support, with 98.1% backing for the annual remuneration report.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

How’s the company doing on diversity? The gender split of the board following the appointment of new finance boss Andrew Duxbury in the spring will be 44% female, with at least one board director from a minority ethnic group.

Entain

When: 10am, Wednesday 24 April 

Where: etc.venues, 200 Aldersgate, London EC1A 4HD.

How to participate: Proxy voting instructions must be returned no later than 10am, Monday 22 April. More AGM details can be found here.

Who’s in the chair? Barry Gibson, the former Littlewoods boss and William Hill non-executive director, took on the role in February 2020. He announced this week he will step down by the end of September, or earlier depending on the appointment of a permanent chief executive. Non-executive and current interim chief executive Stella David will succeed Gibson as chair.

How did the company do in 2023? Net gaming revenues, including the company’s 50% share of BetMGM, rose by 14% or by 2% on a proforma basis. Overall revenues lifted 11% to £4.77 billion and underlying earnings by 1% to £1 billion. The bottom-line loss of £842.6 million included £585 million for an HMRC liability as well as other one-offs. A second dividend of 8.9p a share will be paid on 26 April and increases the total for the year by 0.8p to 17.8p.

How have shares performed? Down 25% to 994.2p (797.4p on Thursday).

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How much is the boss paid? Board member Stella David, who has been in temporary charge since December’s departure of Jette Nygaard-Andersen, is on a salary of £874,200. In order to take up the Entain role she resigned from two non-executive positions. A £500,000 payment due in February 2026 on leaving her role as chair of Vue International will be replicated by Entain.

What about the leaving arrangements for Nygaard-Andersen? She is on garden leave until 13 December, meaning she will continue to receive her £844,600-a-year salary and other benefits in line with her contractual entitlement to 12 months’ notice. Her treatment by the remuneration committee recognises three years in which she achieved resolution of the HMRC investigation into the legacy sale of the Turkish business, a strategic shift towards operating only in regulated markets and an overhaul of the company’s governance approach. Nygaard-Andersen’s total remuneration for 2023 amounted to £1.33 million, including an annual bonus of £407,000 based on 20% of the maximum opportunity. There was no pay-out under financial metrics, with the award solely achieved through safer gaming and customer metrics. Outstanding share awards will continue to vest over their original timeframes.

How did last year’s AGM go? The binding vote on the new three-year remuneration policy got 93.6% support, with the annual remuneration report receiving 98.1%.

What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

How’s the company doing on diversity? Entain is compliant with the Parker Review’s target to appoint at least one board member from an ethnic minority background. Female representation of 33% is below the 40% laid out in the FTSE Women Leaders Review.